What is a Cryptocurrency? Crypto Explained Simply

Ever since Bitcoin was created, cryptocurrency has been an interesting topic. Whether it’s the question of who the real creator was or the highly volatile value, there are several reasons why the hype simply hasn’t died down. In fact, in January of 2021, the market reached just over $40,000 per Bitcoin – which goes to show that the popularity of cryptocurrencies is still going strong.

If you’re looking for a new and exciting investment opportunity or you’re simply curious about what all the fuss is about, take the time to learn a little more about cryptocurrency and why it might replace physical currencies.

What is Cryptocurrency?

To put it simply, cryptocurrency is a form of money, just like pounds or dollars. However, the nature of it (and its potential) is very different from that of typical fiat currencies. Virtual coins don’t have physical counterparts and even though both can be used digitally, the way in which each operates is very different.

Coins can serve as ordinary money and be used as an alternative to the usual forms of payment, but if you dig a little deeper, you’ll find why there’s so much more to these new modes of trading.

Why Is It Worth Investing in a Cryptocurrency?

Unlike ordinary cash, virtual money can be an excellent investment opportunity. Due to the fact that the value of these currencies can often be unstable, it gives individuals the chance to purchase digital coins during a price drop and sell when the value goes back up again.

There is a lot of reasons why it can be well worth your time and money to trade digital coins for a profit. Here are 8 benefits that can come with cryptocurrencies:

  1. You’ll be buying the real deal. Cryptocurrencies are a form of digital money secured by cryptography, making it virtually impossible to counterfeit them. As long as you’re buying from a reputable exchange, there really should be nothing to worry about.
  2. They’re not centralised. An obvious advantage for many investors is that cryptocurrencies are decentralised networks, meaning that they’re not issued by a central authority. For the majority of cases, they can also be interfered with by the government.
  3. People are interested in digital coins. Cryptocurrency is well known today and seen as a viable investment opportunity – but this wasn’t always the case. At first, many people were sceptical of Bitcoin (as well as the other emerging digital currencies). Investing now is far less of a risk, due to the fact that there are many potential buyers.
  4. Cryptocurrencies offer a broad range of investment opportunities. With several digital coins on offer and a variety of individuals willing to buy them, you’ll find that there’s an array of investment opportunities available to you (especially with more well known digital coins).
  5. Transactions can be much smoother. One potential problem with ordinary transactions is that they’re monitored by the central authority. The fact that cryptocurrencies are decentralised reduces this issue, as well as offering fast transactions and lower commission fees.
  6. Cryptocurrencies are more secure than fiat currencies. In most cases, when you open the cryptograph, you’ll get a private key which you can use to enter your Bitcoin wallet. This number can’t be cracked, making sure that all your digital coins are safe and sound.
  7. They’re not just secure, they’re also transparent. While the normal digital currency structure gives only the government access to transaction information, cryptocurrency transactions are publicly available. The identities of traders are kept anonymous, but you’ll be able to see the amount of money in the system and more data that could help you with your own investments.
  8. Volatile prices and market fluctuation. While this is certainly something that can be considered a downside in some situations, it’s the key reason why cryptocurrencies are able to thrive. The fact that the value can be unstable is what allows people to invest – and if it wasn’t for crypto investors, the entire system just wouldn’t be the same.

Experienced traders may find that there are several other points that could be included. However, these are just a few of the benefits that might help you to get a better understanding of why cryptocurrencies are so popular.

Which Cryptocurrency Should You Choose?

While Bitcoin is the most well-known cryptocurrency, it’s far from the only one available. In fact, if you look into it, you’ll find that as of January 2021, there are more than 4000 cryptocurrencies out there. It is worth considering that not every form of crypto coin is successful. 4000 may be a high number, but it’s also not too grand considering that there have been nearly 8,000 in existence so far.

This is one of the key reasons why it can be important for anyone hoping to make a worthwhile investment should take the time to choose the right one.

Of course, Bitcoin is the most obvious choice and the least likely to fail – but it’s also one of the most expensive options. If you’re looking for something a little more affordable, you may want to consider looking into a cryptocurrency like:

  • USD Coin
  • Tether
  • Ripple
  • Polkadot
  • Litecoin
  • Ethereum
  • Dash
  • Binancecoin

While this is just a small selection of the many digital currencies available to you, these are a few of the ones that we think you might want to look into if you’re hoping to find a lower price bracket.

Why Not Get Started Today?

There are so many different digital currencies out there, a lot of which have potential – and any one of which could make a good profit. If you’re looking for an investment opportunity, it’s worth considering this type of digital assets. Before getting started, be sure to search online for trustworthy crypto exchange and a wallet. Once you’re all signed up, there’ll be nothing stopping you from getting your first crypto.